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MGM Resorts Cashes In on Its Way Out of New Jersey

The money couldn't come at a better time.

Cash is coming at just the right time for MGM Resorts(NYSE: MGM). With Las Vegas struggling to recover from the recession, the shining star of Atlantic City, Borgata Hotel Casino & Spa, is paying a big dividend to its owners. MGM is getting $73 million from Vornado Realty Trust(NYSE: VNO) and Geyser Holdings for a portion of the land that Borgata is built on. And there may be more to come.

A new financing deal at Borgata pays MGM and Boyd Gaming(NYSE: BYD), joint-venture owners of Borgata, $215 million in dividends as part of a $950 million financing package. As MGM tries to divest from New Jersey under pressure from regulators over its controversial partnership with Macau tycoon Pansy Ho, last week's payoff is a big step in the right direction.

The next step is selling MGM's half of the property, which might be a little trickier. MGM's sale of its half of Borgata comes with a first right of refusal from Boyd, giving it leverage in sale negotiations. Then there's also the condition that other gaming companies are in. Harrah's is struggling with a huge debt load. Las Vegas Sands(NYSE: LVS) is investing in Pennsylvania instead of New Jersey. Wynn Resorts(Nasdaq: WYNN) has said it isn't interested in New Jersey. Trump Casinos and Stations Casinos are both emerging from bankruptcy. So finding a buyer might be a bit of a challenge.

Nevertheless, investors should be happy about the cash infusion for MGM. My biggest concern is the $13 billion in debt hanging over the company. If the Borgata sale goes through and a Macau IPO happens later this year, MGM may not be in such a bad financial position after all.